Correlation Between Cuhadaroglu Metal and Akbank TAS

Can any of the company-specific risk be diversified away by investing in both Cuhadaroglu Metal and Akbank TAS at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Cuhadaroglu Metal and Akbank TAS into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Cuhadaroglu Metal Sanayi and Akbank TAS, you can compare the effects of market volatilities on Cuhadaroglu Metal and Akbank TAS and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Cuhadaroglu Metal with a short position of Akbank TAS. Check out your portfolio center. Please also check ongoing floating volatility patterns of Cuhadaroglu Metal and Akbank TAS.

Diversification Opportunities for Cuhadaroglu Metal and Akbank TAS

0.77

Correlation Coefficient

Cuhadaroglu Metal  Akbank TAS

Poor diversification

The 3 months correlation between Cuhadaroglu and Akbank is 0.77. Overlapping area represents the amount of risk that can be diversified away by holding Cuhadaroglu Metal Sanayi and Akbank TAS in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Akbank TAS and Cuhadaroglu Metal is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Cuhadaroglu Metal Sanayi are associated (or correlated) with Akbank TAS. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Akbank TAS has no effect on the direction of Cuhadaroglu Metal i.e., Cuhadaroglu Metal and Akbank TAS go up and down completely randomly.

Pair Corralation between Cuhadaroglu Metal and Akbank TAS

Assuming the 90 days trading horizon Cuhadaroglu Metal Sanayi is expected to under-perform the Akbank TAS. But the stock apears to be less risky and, when comparing its historical volatility, Cuhadaroglu Metal Sanayi is 1.5 times less risky than Akbank TAS. The stock trades about 0.0 of its potential returns per unit of risk. The Akbank TAS is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  5,660  in Akbank TAS on September 13, 2024 and sell it today you would earn a total of  730.00  from holding Akbank TAS or generate 12.9% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Significant
Accuracy	100.0%
Values	Daily Returns

Cuhadaroglu Metal Sanayi  vs.  Akbank TAS

Cuhadaroglu Metal Sanayi

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Cuhadaroglu Metal Sanayi has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fairly strong forward indicators, Cuhadaroglu Metal is not utilizing all of its potentials. The recent stock price confusion, may contribute to short-horizon losses for the traders.

Akbank TAS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in Akbank TAS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite fairly inconsistent forward indicators, Akbank TAS demonstrated solid returns over the last few months and may actually be approaching a breakup point.

Pair Trading with Cuhadaroglu Metal and Akbank TAS

The main advantage of trading using opposite Cuhadaroglu Metal and Akbank TAS positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Cuhadaroglu Metal position performs unexpectedly, Akbank TAS can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Akbank TAS will offset losses from the drop in Akbank TAS's long position.

The idea behind Cuhadaroglu Metal Sanayi and Akbank TAS pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Transaction History module to view history of all your transactions and understand their impact on performance.